Business models – back to basics

Very few of the business models thriving in 2005 will be around in 2020 in the same form. We can already see a variety of new business models bubbling up in industries from banking to media. But we’ve also seen companies collapse in the last few years and, more often than not, failure to adapt the business model is a key factor.

Re-engineering operations to cut costs and extend the life of business models has been a reasonable strategy in the past. But there are two trends that will require completely new business models within the current decade:

people brought up with computers in the home - ‘digital natives’ - will become the dominant type of customer, and

after years of digital technology changing the way products and services are transacted, we will see it increasingly change the way value is created.

At the same time, trust in the business model will depend on you communicating effectively with investors and others about how value is created now and going forward. The UK Governance Code now requires that companies explain their business model – but what’s the best way of doing that?

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